Legal Question in Wills and Trusts in New Jersey

Settlement of estate

I am one of nine beneficiaries of my aunt's estate. The executor, an attorney, contacted the beneficiaries in late July, saying he could disburse half the funds pending a review by the state. One of the beneficiaries has refused to sign off, which has stalled the release of the funds. First, what recourse do the other beneficiaries have; and, second, typically how long does it take for the state to review a will? The approximate value of the estate is $600,000. My aunt passed away in September 2007. Also, is it possible for me to contact the state directly to learn the status of its review.


Asked on 10/19/08, 3:14 pm

2 Answers from Attorneys
Walter LeVine Walter D. LeVine, Esq.

Re: Settlement of estate

While Ron has properly responded, your situation is slightly more complicated. The NJ Inheritance Tax is calculated using three components: Size of the estate, amount going to each beneficiary and relationship of the beneficiary to the decedent. Since the estate size is under $675,000 there is no general inheritance tax. However, if beneficiaries are remotely related (this was your aunt so you are considered remotely related) and remote beneficiaries are to receive more than $499, their inheritence is subject to this tax. Until a final determination of tax is made and paid, the Executor cannot distribute all funds. The return is due within 8 months of date of death (it can be filed earlier) but it can take the State several months after receiving it to make its determination. Plus, all heirs must sign off to close the estate. Anyone refusing to sign off can delay distribution further, unless the Executor gets Court permission. This would result in higher costs to the estate and could impact your final distribution.

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Answered on 10/20/08, 12:43 pm
Ronald Cappuccio Ronald J. Cappuccio, J.D., LL.M.(Tax)

Re: Settlement of estate

The attorney is following a very normal practice. First, a portion of the estate is distributed. The NJ Inheritance Tax Return is filed and reviewed by the State. Then, when all bills are paid and there are clearances from the State, the balance is paid to the beneficiaries.

Each beneficiary is required to sign a "Refunding Bond and Release." This document is an agreement to not have a formal accounting before the Probate Court and to agree to return funds if needed to pay estate debts that show up later. If the beneficiary does not agree to this, the Executor must prepare a formal accounting for review by the Surrogate's office and approval by the Court. This costs thousands of dollars in filing fees and extra legal fees. Further, it will delay the distributions for up to 6 months.

My suggestion is to talk to the reluctant beneficiary to find out why he is not agreeing to the much less expensive informal accounting process.

I hope this helps!

Ron Cappuccio

http://www.SaveYourEstate.com

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Answered on 10/19/08, 5:48 pm


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